Making planting grass a business model is probably the contribution of Xiao Hongshu. But todays announcement caught KOLs busy planting grass on Xiao Hong Shu by surprise.
On May 10, Xiaohongshu issued the Brand Partner Platform Upgrading Instructions, which set higher requirements for fans and monthly exposure. Some KOLs that did not meet the requirements were disqualified and could not receive advertisements. For a time, KOLs ushered in Black Friday and Little Red Book KOL on the rooftop. It is reported that there are more than 6,000 KOLs on Xiaohongshu, and about 2,000 people have been affected by the new regulations.
Over the past six years, Xiao Hong Shu has grown into a unicorn valued at $3 billion, investing in two giants, namely, celebrities, fans and Ali Tencent, from community + e-commerce to lifestyle platform, but now it is facing a double crisis.
Cheng also grows grass, disaster also grows grass. Recently, many media reported that the grass notes on Xiao Hong Shu were fraudulent, and that praise, forwarding and hot spots could be manipulated artificially. Tobacco soft texts and health care notes exposed earlier have made Xiaohongs writing, which relies heavily on high-quality community content, face a crisis of trust.
At the same time, the commercialization of Xiaohongshu is not smooth. Its self-operated e-commerce has been exposed many times fake goods, poor after-sales and other issues. By 2018, the target of 10 billion yuan GMV has not been achieved, let alone profitability.
The idea of content is responsible for beauty, e-commerce is responsible for making money to support the family has not been realized. Xiao Hongshu also realized that the community + e-commerce model is not feasible. In February 2019, he upgraded the organizational structure and launched a brand collaborator platform to connect the brand side, MCN and KOL. In the future, he extracted commissions from it and explored new commercial ways.
For the new brand partners regulation, Xiao Hongshu said to Fujian Finance and Economics that it is to improve the quality of collaborators, severely punish unreported advertising notes and data fraud, but also requires bloggers to create more real and valuable content.
Industry insiders said that Xiao Hongshu started KOL, on the one hand, raising the threshold to save the crisis of trust, on the other hand, to help commercialization. It is undeniable that Xiaohongshus community has its own school in China, and its value and potential are enormous. However, the mode of building community aggregation flow through advertising has not yet formed a mature system. How to balance the relationship between platform content quality and marketing is the problem Xiao Hongshu will face in the future.
Platform in Trust Crisis
According to Xiaohongshus new edition of Brand Partner Platform Upgrading Instructions, the admission conditions for brand partners have been changed to the number of fans (> 5000) and the average exposure of notes in the past month (> 10000), whereas the previous requirement was that more than 1000 fans, and the average exposure of notes in the past month (> 1000).
According to the official rules, KOL can only receive advertisements on Xiaohongshu after it has been audited by Xiaohongshu Platform and become a brand partner. After raising the threshold this time, many KOLs were disqualified.
The new regulation also strengthens the crackdown on private orders. The initial score of partners is 12 points. Private orders will be deducted directly by 12 points. At the same time, the contract will be cancelled, and it will not be able to become a brand partner again within one year.
Industry insiders analysis, Xiao Hongshu to strengthen control of KOL, perhaps with the previous exposure of grass note fraud.
Recently, many media said that it only takes more than ten yuan to write and send a false grass planting note on behalf of Xiaohongshu, and it can be online in three hours. Businessmen also solicit writers to standardize forgery and spend money on popular recommendation. In addition, the topic of Xiaohongshu now has 95,000 soft articles on tobacco has been hot searched on Weibo. For a time, Xiaohongshus good reputation of sharing recommendation by UGC has been greatly questioned, and many people are uncertain about whether to plant grass or the routine.
Despite the fact that tobacco and other tobacco planting notes have been offline, ID: rancaijing searches for Xiaohong Writer on the Internet, and can still see campus Recruitment Information release, recruitment Xiaohong Writer, part-time and other posts.
Xiao Hongs Handwritten Recruitment on Douban Flap
Xiao Hongshu said that the company has dozens of anti-cheating teams, 500 auditing teams, and more than 100 sets of data models to crack down on cheating, such as proxy, brushing, etc. From January to March 2019, it handled 138,000 black accounts involving proxy, 380,000 cheating accounts and 1.21 million cheating notes, but the actual situation is still not optimistic.
According to the national enterprise credit information publicity system, Xiao Hongshu was fined for false advertisements. In 2019, Xiaohongshus main company, Xingyin Information Technology (Shanghai) Co., Ltd., has received six fines, including four fines and two warnings. On February 20, Xiao Hongshu even received two tickets: a fine of 30,000 yuan for publishing false advertisements in violation of the Advertising Law, and a fine of 30,000 yuan for deliberately delaying or unreasonably refusing to pay compensation to consumers.
Once cooperated with brand merchants, Rouyu, a marketing personage who has done product promotion in Xiaohongshu, told Fujian Finance and Economics that the brand will use various channels to reach consumers. Xiaohongshu, a pure consumption-oriented platform that has gathered traffic, will never let go of the brand.
He said, The content and tone of Xiaohongshu are different. Brands may compile some passages to shoot some videos on tremolo, but in Xiaohongshu, they should focus on sharing product ingredients, efficacy, usage methods and feelings. Usually, they need to imitate the real use experience as much as possible.
E-commerce analyst Li Chengdong believes that Xiaohongshu is equivalent to the public comment in the shopping field, gathering a large number of high-trust consumers, and it is easy to become the target of promoting products.
Objectively speaking, false notes are not the responsibility of Xiao Hongshu, but they may lead to trust crisis, loss of users and weak growth of users. The value of the platform is high-quality content. Xiaohongshu should ensure the quality and richness of the content while ensuring the activity of the platform, and standardize and optimize the management and operation of the platform. Li Chengdong said.
E-commerce has had little success.
In the face of the crisis of trust, Xiao Hongshus commercialization has not gone smoothly.
Starting from Haitao strategy, to community + e-commerce mode, and then to lifestyle platform, Xiaohongshu has been financed by True Fund, Tiantu Capital and GGV Jiyuan Capital all the way since its establishment six years ago. At the same time, Tencent and Alibaba have invested in Xiaohongshu. By March 2019, the number of users of Xiaohongshu has exceeded 220 million, with an average daily exposure of 3 billion notes and a valuation of 3 billion US dollars.
Xiao Hong Shus previous sources of financing/Tian Eye Check
In August 2014, Xiaohongshu launched the Welfare Club and began to test water self-operated e-commerce. It diverted the community sharing recommendation directly to the purchase link, completed the business closed-loop, and provided the selections, purchasing, customs, customer service, warehousing and other links independently by the platform.
On the one hand, Xiaohongshus self-operated e-commerce has no advantages in supply chain, channel, logistics and other aspects, and has been exposed fake goods, poor after-sales and other issues. On Sina Black Cat Complaint Platform, there are 171 complaints about Xiaohongshu, all of which are directed at e-commerce. On the other hand, in 2018, the target of GMV10 billion yuan of Xiaohongshu self-owned e-commerce has not been achieved, and the profit is far from being realized.
More importantly, the field of e-commerce is facing fierce competition. According to Q1 Quarterly Monitoring Report of China Cross-Border E-Commerce in 2018 issued by Ai Media Consulting, the aggregation of head-end E-Commerce such as NetEase Koala, Tianmao International and Jingdong Global Purchase is obvious, accounting for more than 60% of the market, while the market share of Xiaohongshu is only 5.6%.
As can be seen from the comprehensive e-commerce APPTOP10 list released by Yiguan in March 2019, Xiaohongshu ranks fifth, but the annual growth rate of active users is 2.2%, which is much lower than Taobao, Jingdong, Tianmao and Suning, which are ahead of it.
Source of App Ranking for Integrated Electronic Commerce
Xiaohongshu was founded three years earlier than Pingduo, and Pingduo had nearly 400 million users in 2019. Xiaohongshu had only 200 million users, and Pingduo exploited the incremental market. The user groups of Xiaohongshu were no different from Taobao and Jingdong. In the mature e-commerce business in China, Xiaohongshu can not provide obvious differentiation advantages in the competition of Tianmao, Taobao, Jingdong, NetEase Koala and Pingduoduo. In addition, Xiao Hong Shu also faces some vertical platforms such as what is worth buying, Mushroom Street, Beauty Theory, such as Han, honeydew and so on.
Yang Yang, an analyst, pointed out that Xiaohongshu, after introducing Alis investment, should undertake the function of guiding Taobao to a certain extent, and the self-operated e-commerce sector will inevitably be affected.
Qu Fang, the founder of Xiaohongshu, once said that the companys revenue source was e-commerce, and the community did not make a penny. In April 2018, Qu Fang changed his tone and said that he would explore the commercialization path of advertising realization, probably using the form of information flow advertising.
Although a large amount of traffic has been gathered, it is still difficult to complete the business closed-loop from community content diversion to e-commerce. The traffic of Xiaohongshu community can easily turn into making wedding clothes for others.
Xiao Keai, as a three-year user of Xiaohongshu, said, I like Xiaohongshu community very much, but after planting grass, I will not buy it on the platform. I will find trusted shopping or other shopping platforms. When introducing things, I will often show users the sharing of Xiaohongshu.
E-commerce platforms are numerous and transparent in price. Consumers pay more attention to the price and quality of products, but their loyalty to the platform is low. It is probably difficult to support Xiaohongshus revenue by e-commerce.
Can Xiao Hong Shu become the next micro blog?
After the frustration of e-commerce exploration, Xiao Hongshu began to seek transformation.
In February 2019, Xiaohongshu founders Mao Wenchao and Qu Fang wrote in an internal letter that 2019 was the key year for the growth and commercialization of Xiaohongshu users and announced the latest organizational upgrade. Among them, Xiaohongshus original community e-commerce Department has been upgraded to a brand number department, and the self-operated e-commerce business welfare club has upgraded and integrated the whole process functions of commodity acquisition and marketing, warehousing logistics and customer service.
Brand Number is the official community set up by Xiaohongshu for brand merchants. Brand merchants can publish content and add purchase links on the number, which is equivalent to connecting the community with e-commerce and enabling the brand to operate. At present, OZLANAUGG, PAZZZION and other Spanish brands are in residence.
Xiaohongshu also launched a brand collaborator platform, which incorporates brand number, MCN organization and KOL into a system. Brands find suitable MCN organizations to cooperate according to their needs. Content output will be officially audited and then put into the community. KOL can receive advertisements on the platform only after it has been approved by Xiaohongshu as a brand partner. In the future, Xiaohongshu will profit by drawing commission. At present, brand partners have been on line for nearly five months from internal testing.
These adjustments are interpreted by the outside world as Xiaohongshu will integrate third-party e-commerce into the community in the future, weaken self-owned e-commerce, and focus on building content communities, through traffic and advertising.
In fact, in recent years, Xiao Hongshu did invite many stars to stay, sponsor a variety of exploding money, increase the richness of community content and gather traffic in combination with its own traffic. So far, more than 200 stars have been identified on the platform, including Zhang Yuqi, Lin Yun, Ouyang Nana, Qiwei and so on.
The latest regulations aim at KOL, which raises the threshold for brand partners to access, puts forward higher requirements for the number of fans and average exposure of notes, and increases the penalty for private orders, which surprises many KOLs.
Brand Partner Agreement
Xiao Hongshu told Fujian Finance and Economics that this is to improve the quality of collaborators, increase MCN efficiency, severely punish unreported advertising notes and data fraud, for bloggers to create more real and valuable content.
This shows that Xiao Hong Shu has strengthened its management in regulating the official advertising besides cracking down on false grass brushing lists. Rouyu analysis, for brands, low exposure is not valuable, for KOL, they must make their content better in order to be profitable, so Xiaohongshu for the management of people and advertising will be more standardized.
But the situation that Xiao Hong Shu will deal with in the future is still very complicated, because in addition to the official advertising, a lot of people have signed up external companies for commercial launching, they will not be without advertising, and many people have visibility on many external platforms, and do not necessarily rely on Xiao Hong Shu. He said.
In the view of Huafeng, an investor who pays attention to consumption, the e-commerce of Xiaohongshu today is equivalent to a complete set. Xiaohongshus focus on platform richness and community content is a forced but wise choice. Now the e-commerce platform has been relatively saturated, consumers have many choices. On the contrary, Xiao Hongshus community is self-contained and of great value in China.
As a small red book in the community, Sina Weibo serves as a model for business models.
Huafeng analysis, micro-blog introduced MCN, which is equivalent to an external agency. MCN acts as a proxy for many bloggers. One side negotiates with businesses, the other side docks with micro-blog. As long as micro-blog operates thousands of MCN organizations, its management becomes simpler. Sina Weibo has formed a platform, MCN agencies, bloggers win-win situation, relatively stable format.
Nowadays, the consumption habit of female users is to plant grass first, then search and purchase. Xiaohongshu provides an important link of consumption decision-making in womens shopping. As long as the number of users is large enough, it is established to refer to the advertising cash mode of Weibo.
In Rouyus view, Xiaohongshu can restrict the act of billing, but it is difficult to restrict the brand to advertise generously. Xiaohongshu itself is a content platform with great e-commerce attributes. Its e-commerce attributes are easy to be used by the brand and become a commercial display platform and advertising platform, which will be mutually exclusive with content. Whether users want to eat this is a problem.
For Xiaohongshu, the quality of content that the platform relies on to survive needs to be continuously high-quality output. How to realize it reasonably without affecting the community experience itself is a great challenge.
* The pictures are from Visual China. At the request of the visitors, Rouyu, Huafeng, Xiao Keai and Yang Yang are aliased names.
Source: Burning Financial Responsibility Editor: Wang Fengzhi_NT2541